I read a very thought-provoking article the other day from Early Retirement Dude: I don’t think we owe college to our kids. Does that make me a bad father?.
(Hat tip to Justin of Root of Good for sharing it on Twitter.)
I mostly agree with the title (more on this later), so I jumped into the article. You can click the link above and open it in a new window, because I’m probably going to be quoting some stuff.
It starts off powerfully and I think almost anyone would agree:
It’s not that you owe your kid a fashionable coat… it’s that you owe her a warm one… Anything beyond that’s a choice, not an obligation.
This is a cool illustration of needs vs. wants. This is an interesting discussion when put into the context of college. I usually think of this in terms of: My children may want to go to a small expensive liberal arts college, but their college needs may be met by our current state school (University of Rhode Island currently.)
The idea college isn’t a need is today’s world is something I hadn’t considered. I feel like a college degree nowadays was like a high school diploma of the generation before me. It’s hard to really say what a need is when it comes to education, but I think it’s best to have all the options open. Not having a college degree closes a lot of doors.
A few sentences later this hit me hard:
You don’t owe your kid college… you owe her a good start in life. Assuming the two are the same thing might be more harmful than helpful to both of you.
Doh! I had considered the two the same. My next thought is that this thought is going to be hurting my children. Fortunately they are 5 and 6, so I’ve got about a decade to think about this and solve the problem. (Of course, it will be here in a blink of an eye like the first 5 years.)
I don’t see where this harm would come from in most cases as long as people make reasonable choices.
Nonetheless, I’m excited to read the rest of the article, because Early Retirement Dude is going to give his ideas on what a “good start” is. I feel like my view is very basic, so I’m looking forward to seeing a new viewpoint.
We move on to the next section:
“A successful career isn’t the same as a successful life… We’ve all heard about the guy who’s miserable in a high-paying job.”
I think a successful career should be part a successful life. Who wants to feel unsuccessful roughly half of his/her waking life? That doesn’t necessarily mean that success is determined by a high-paying career. It could mean that you found fulfilling work. And finding that fulfilling work is probably easier when you have the option to do things that you want to do… and maybe change your mind as you go along.
I believe that a college degree helps with that.
It’s only been one generation since college became perceived as the gateway to success.
What’s been diminished, then, is the idea that the gateway to a ‘better life’ is ability and not pedigree. When hiring a candidate for a sales position, would you rather find a recent college grad with a degree in sales, or a candidate with a ten-year track record but no college on his resume?
This section changed my view of where the article was going. I just don’t buy these kinds of arguments. For example, it’s only been one generation since we felt the need to have internet access. A lot can happen in a generation with how fast news, information, and people can travel now. What happened in a previous generation might not relevant in the next one.
I think society has changed and we have to adapt to it. While society may need to rethink the value of a degree vs. experience, we can’t gamble our loved one’s future on society doing so. It seems that the vast majority of people are getting degrees and that sales position is going to have someone with the same or more experience AND the degree.
Sending your kids to college requires them to submit themselves to unreasonable strictures imposed on them by the university system.
I’m not sure that all colleges have the unreasonable strictures imposed on them. Some are pretty liberal. However, I’d say that every public high school and a lot of careers have these as well. It sounds a little unfair to single out college for this.
Not all kids can handle college
This is true. However, if this is the case then the question of whether you owe college to the child is trivial. Do you owe a two year old a family heirloom hunting knife? No.
If you’re carrying credit card debt or any other debt above student loan rates, paying tuition is a terrible economic inefficiency.
This is very true as well. In this case, I’d say that if you can’t afford to pay for college, you don’t owe it. I hope there aren’t too many people running up credit card debt to pay for their kid’s tuition.
Many of us will have to balance taking care of our kids against taking care of our parents.
This is a good point, but again covered by if you can’t afford to pay for college, you don’t owe it.
To wit: if you pay for your kid’s college you can forget about ever retiring yourself.
It is possible to pay for your children’s college and retire yourself. People have done it. Seriously.
It’s usually well-settled personal finance that you pay for your retirement first. As the saying goes, “You can’t get loans for retirement.” (Well maybe a reverse mortgage.)
In the end, all these last three financial situations are particular on your personal situation. Early Retirement Dude supports his points with a lot of good data about the average person in the situation. The good thing is the average may not relevant in your situation. Early Retirement Dude himself points out that he doesn’t have to take financial care of his parents.
The good thing is that you aren’t a statistic. Also, chances are, that if you are reading this, you are probably doing better financially than most.
So… College: What We Owe Each Other
With the background information covered, we can move forward.
The first thing I learned is that the question of whether a parent owes college is only relevant if:
- College is the right option for your child
- College can be afforded
The first one requires a subjective personal assessment of your situation. I can’t help you with that.
The second one is a complex personal finance question. It could be a good one to work on with your financial planner. That planner may be able to suggest a certain range of money you could afford for college. That could help pin down the college options that are a good fit.
If college is the right option and it can be afforded, I think we finally get to the philosophical question:
What do you as a parent owe your child when it comes to college?
When I was going to college, our family fortunately dodged this discussion by getting a full scholarship to an excellent school. I suspect there would have been an option of getting some help from my mother (my father had died a few years before), if I went to a public school. It could have been more, perhaps even 100% of a private school, but I want to say that this was a minimum expectation from me.
I’ve put a lot of thought about this question when it comes to our own kids, ages 5 and 6. However, my wife’s GI Bill may cover half of their college expenses if they choose to go to an in-state public college. For other colleges, it is a set amount of money per year. It’s a tremendous benefit. In a lot of ways, it could “take us off the hook” for what we owe our children.
That’s not to say that we haven’t saved some money in 529 plans. It’s just not going to be very much in comparison to what the financial planners tell you to save. If we don’t add to it, maybe it will pay for one more year for one child. That would cover 5 of the 8 years of school between the two children. We may also be able to save more, but we are investing it now in private school. (We qualify for a great scholarship.)
Hopefully there’s an educational snowball. My (completely based on nothing scientific) feeling is that if you get children started well early on, it will pay dividends down the line.
So what about the other three years? That’s where they are going to have to pick up the slack. Hopefully they’ll get scholarships. Perhaps they’ll get loans. Perhaps they’ll work. That’s what they owe us when it comes to college… having some skin in the game and doing the best they can.
In any case, I think there’s an expectation to have a clear, financial conversation about college. I’m not sure when those kind of conversations start, but I think I’ll drop dad hints for quite a bit, so they’ll have expectation.
Again, these are very early thoughts. My thoughts are likely to evolve over the next 10 years as we approach blastoff.
What are your thoughts about what we owe to each other when it comes to college expenses? Let me know in the comments.
P.S. The title “What We Owe to Each Other” is taken from The Good Place, which was taken from the real book.
I like the idea of setting your child up for a life after high school, and setting them up for success. Every parent and every child and every family is different, so there is no one size fits all response to this type of question. I am almost at the point of retiring (FIRE retiring, not like falling off the planet retiring), I am 43, and I paid for my child to go through school. It can be done.
I took money (in my case, bonuses and employee stock purchase plans) and put it aside for my son when he was young. That money grew, and when was ready to go to college, he had about $15k a year (assuming 4 years) to go to school. My son knew that was what I was going to give him. It was in his name (UGMA/UTMA account), and if he blew it, that was all on him. He went to a commuter school and lived at home, for the first 3 semesters. He got his prerequisites out of the way, and learned how to be a good student. Then I pushed him to go to a state school and live on campus. He hated me for this but he needed the push out of the nest. Best decision I ever made as he came out his shell and was able to get some scholarships.
He graduated college with $30k left in his account. That is his money, free and clear, and he can do with it as he pleases. He has enough money to get a good start in life (down payment on a house, wedding, etc.) He has not done the same thing I would have done and has spent the last 1.5 years since graduation trying to find “himself” and a decent paying job. He finally has I think, and ready to move out.
What you owe your children is to help them if you can, and help them with guidance and experience. If they choose to go a different path, that is up to them. Since I had one child, I didn’t have to worry about this, but treat your children fairly and identically (or close). My parents have 3 kids and everything they do for us, they put in a spreadsheet and categorize any gifts, etc. showing what they do for each family.
Lazy Man says
I don’t think anyone wants to set up their child for failure, LOL. It feels like a tightrope sometimes between letting them fail and learn, and just helping them and pushing them to success. As you say, it’s kind of a personal belief thing and there’s no answer that fits everyone. That’s why I took the easy way out and said talk to your financial planner to see if it’s possible and then you can go from their with whatever you believe is best.
That’s a very cool story about your son. I’ve been thinking of putting together some college hacking ideas like that to get a degree on the cheap.
I believe you have quite the responsibility for your children, if you chose to create them. So yes, if you can afford to pay for some of their education, I’d do so.
However, of course paying for college can also come with some obligations for the child. To choose a degree that has some value, after graduating. And to use the money to learn, and to try to get decent grades.
I think that during an education you can explain to your kids that some of their education will be covered, but also that you expect something from them.
Lazy Man says
Those are my thoughts too Petra. If you can afford it, it’s my opinion that you should at least cover some portion. My wife had to personally pay for a lot of her education while I was on scholarship. Guess who never missed a class? (Hint: not me.) That’s one reason why I want them to have some of their own money involved.
We’ll talk to them about our plan to cover some of the payments, but I think it’s going to be a conversation that takes place over a long time rather than shocking them when they turn a certain age.
Sobering article – if nothing else, this should be required reading for those with young children. My children are 18 & 21 today, a senior high school and a junior in college. I’m paying about $25k a year for the junior and expect to pay about $8k a year for the younger child. The younger child received an almost full ride due to his academic history. They’ll attend the same university, which is known for generous academic scholarships. While true I saved money for them, it would have never “been enough” to send them both to college without academic scholarships. Were we lucky? Partially. We invested in private school education for both elementary and high school for our kids. Total spend for both of them? About $160k over their younger years. This paid incredible dividends. I went to a private catholic elementary school and public high school. My wife did the same, but continued in a private catholic high school. We both knew the benefit of a private school education, and it was coupled with the faith-based aspect, which was important to us.
I am not a college graduate – I’m the example above where I lucked into a sales job, was successful, and earned a living – and saved. Having said that, one of my lasting regrets was to never have finished college – despite making a great living an soon to be retired (am now 54).
My promise to my kids, myself, and my wife, was to send my kids to college. Perhaps we lucked out in that our kids and college was “a good fit” – I know many families that spend tons of cash and their kids aren’t having such a great time at college – miserable grades, and all the like. That’s a much harder conversation – when do you draw the line at non-performance? Shoot, we all want our kids to have a good start and a shot at a better chance in life.
Things (generally) have worked out for us and the college plans – but would I have gone into debt for my kids to attend college? Yep, but that’s what we do for our kids. Would I have bankrupt myself? No.
If I had it to do over – I would have saved a LOT more for college. My son has received a full academic scholarship (we’re responsible for room, board, etc.). He and I have had some deep conversations about whether the school (Alabama) was right for him. I countered with the fact that we couldn’t turn away $100k+ in scholarships. He had (maybe still has) the sense that his grades and test scores would have gotten him into a “better” university. Of that there is no doubt – but we had to have the conversation about whether graduating from college debt free had value and how, if he went to an Ivy league school, how would things be different? One, he’d (and me) have a ton of debt. His particular passion (engineering or pre-med) (he hasn’t totally made his mind up yet – which, as an aside, it’s incredibly unfair that we expect an 18-year old to know exactly what they want to do in life when they are 18…) doesn’t really call for an ivy league school. So, the undergrad degree doesn’t matter so much.
My daughter wants to be a dentist. And my son may want to become a doctor. Who’s paying for dental/medical school? I’ve made it clear to them that they are on their own for that. There are plenty of options – taking out loans (expensive, but doable), or military service. While there are risks with the military service, it’s a great deal – a year of service for each year of school. My DD probably won’t do the military scholarship program, but I suspect my son probably will if he goes the pre-med route.
So… looking back? We’ve been incredibly fortunate and made some investments in their private school education. I’d do it again – but would still save more.
It’s all individualized and impossible to forecast when the kids are young. My wife and I both have college degrees(she has a masters), so that was the expectation. We invested heavily by sending them to private school. But, life gets in the way and neither have taken advantage of their opportunities(as of yet, can’t call it done when they are in their early 20’s). If I had it to do over I might have skipped the private school and saved more in the event they decide to do college some day. I think most of us make the best decisions we can at the time.
Lazy Man says
That’s the difficulty I have with this. It’s impossible to forecast when the kids are young, yet you are expected to save for it.
I’m not sure if I ever took advantage of my computer science and linguistics degrees. I wouldn’t be surprised if my kids’ school had a WordPress/blogging elective in the 8th grade that would cover most everything they’d need to know for what I do. They’d probably be much better than me with natural social media skills.
Good point that you just try to make the best decision you can at the time. I always say that my crystal ball is in the shop :-).
ROBYN A. WEINBAUM says
my kids did the same thing i did when i went to college and grad school: Full academic scholarships. it was made clear to them that the scholarships were there, and as long as they didn’t screw up, available. they even got excess towards books, private lessons [my youngest is majoring in violin performance at an exclusive private school], and equipment.
my kids went to public school, volunteered, were members of chess/rocket/ therapy horse/music/competition math clubs.
we did have a prepaid college plan for the older two, for in-state tuition. my oldest used the funds for some of the equipment she needed for her degree, my 2nd born cashed it out to buy a used car.
so there are alternatives. old fashioned, traditional alternatives.